When Brian Morgan finally found the courage to visit a GP for his alcohol addiction a few years ago, the encounter confirmed his worst fears about top-down mainstream services. "He basically told me to pull my socks up and stop drinking," recalls Morgan, 38. "In substance misuse there's a perception that you bring it on yourself. You take what's on offer even if it's not very good – because you're not worth much anyway." The encounter meant that window of opportunity towards recovery was lost.

Morgan began drinking in his teens and it became his social prop. His addiction escalated until he lost his project development job at a health trust around six years ago, became estranged from his partner and nine-year-old son and ended up sleeping rough.

After four stints in rehab, he got back on his feet thanks to a community-based support programme and his desire to be reunited with his son. His experience led to a job in West Sussex county council's drug and alcohol action team (DAAT) where he co-ordinates service user groups.

Now Morgan and his service user peers are collaborating with the Royal Society of Arts (RSA) on a project to design and test user-centred services. The charity's report, Whole Person Recovery, published today as part of the project, argues that if recovering addicts help to shape services and are involved in social networks, services are more engaging.

The economic and social cost of drug use is estimated at £15.3bn a year, according to government figures. Problem alcohol use is estimated to cost £2.7bn a year in healthcare alone, says the charity Alcohol Concern. Yet of 152 drug and alcohol addicts and recovering users surveyed by the RSA, half of those who had received treatment did not finish their programme and two in five had never had formal treatment.

The report's authors conclude that services are still too centralised, standardised and stigmatised, fail to help the majority of problematic users and exclude recovering addicts from the drive towards personalised services. "Ultimately, service users will always be the experts in knowing what will work best for them," says Sam Tearle, West Sussex council's DAAT joint commissioning manager. "Hopefully, the move towards a more localised model of decision making and target setting will reduce the need to commission services in line with rigid frameworks."

The time is right for a fresh approach, says the RSA, not least because the public spending squeeze could exacerbate debt and social exclusion, fuelling addiction.

While the concept of user-led services is not new, practice is patchy and the approach is rarely used for drug and alcohol services. Steve Broome, RSA head of research and the report's co-author, explains: "We're not saying that people haven't done innovative grassroots-based bottom-up initiatives, but this work exists outside any mainstream framework."

The RSA will launch a range of user-led schemes in West Sussex next year, including a 24-hour online radio station, funded by the council's DAAT. The station will broadcast stories of drug and alcohol recovery, offering round-the-clock support, a vital safety net for recovering addicts.

Another plan is a £25,000 "community chest", allowing people to apply for grants of up to £500 to help their recovery. Broome explains: "The journey to the next stage of recovery can be hindered by something minor like someone couldn't afford a travel pass to get to work." Grants, awarded by a panel that includes recovering addicts, carry the stipulation that beneficiaries return to show how they put the money to good use.

But in the current financial climate, do statutory and third sector organisations really have the time or money to focus on such user-led approaches?

Broome argues that user-led services are affordable – the grants scheme has a relatively small budget – and unleash a "hidden wealth" of knowledge among users. Tailored responses to addiction, delivered in a user-friendly way – where and when they are needed by users, for example – boost people's chances of staying in recovery and so increase efficiency.

Overturning traditional practice is, admits Broome, a "big ask", but is worth it. The government's emphasis on punitive drugs policy and the demand on service users to take more responsibility for shaping services will be challenges that will need to be faced.

And Morgan reveals how ingrained the orthodox, top-down approach is: "How does it feel being listened to? It feels very different, odd almost."